Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest,americast.usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Wed, Oct 21 1992 Date: Wed, 21 Oct 92 04:30:09 EDT Message-ID: Lines: 132 10-21 0000 DECISIONLINE: Personal Investing USA TODAY Update Oct. 21, 1992 Source: USA TODAY:Gannett National Information Network FUNDS' RETURNS WILL SHRINK: Expect less from stock and bond funds in the 1990s. That's the word from the USA's largest mutual fund companies. American Funds group, which offers four of the 10 largest stock funds, sent the most recent warning to investors in its Income Fund of America annual report. The stock market delivered a 17.6% average annual return the 10 years ended 1991, the report says. (For more, see special Funds package below.) OAKMARK FUND GOES INTERNATIONAL: Chicago-based investment adviser Harris Associates is going international. Harris, which manages the top-performing Harris Oakmark fund (up 52% the 12 months ended Sept. 30) just opened Oakmark International fund. The $21 million fund follows the same approach as the Oakmark fund, looking for undiscovered or out-of-favor stocks. Minimum investment: $1,000. CHRYSLER EARNINGS SOAR: Led by strong minivan and truck sales and continued cost cutting, Chrysler's third-quarter earnings soared far beyond analysts' expectations. Chrysler says third-quarter net income was $202 million, or 62 cents a share, vs. a loss of $82 million, or 36 cents a share last year. Analysts expected net income of $100 million to $185 million. They say the best is yet to come. AUTO INDUSTRY GETS GOOD NEWS: Chrysler's surprising earnings report out Tuesday sends a positive message about the U.S. auto industry in general, analysts say. But they don't expect to see Ford and General Motors in the black again until early next year. Chrysler was buoyed by strong sales of minivans, the Jeep Grand Cherokee and the new LH midsize sedans: Eagle Vision, Chrysler Concorde and Dodge Intrepid. CLINTON STIRS UP BOND MARKET: Bill Clinton is haunting the bond market. And that has interest rates across the board shooting up. As the Democrat's bid for the presidency strengthens, bond investors are selling. Tuesday, they pushed yields on the bellwether 30-year Treasury bond to 7.64% from 7.57% Monday. "It's a Clinton market," said David Jones, economist at bond brokerage Aubrey Lanston. INVESTORS EXPECT CLINTON TO WIN: Bond investors are basically trading as if Democratic presidential candidate Bill Clinton has already won the White House and put into effect measures to boost the economy. Most expect he'll try to spend more money to upgrade roads and bridges among other things. If Clinton's plan adds to the deficit, the government will have to sell more Treasury bonds. That's pushing up rates. WELLS FARGO REPORTS DROP: Several of the nation's largest banks reported higher third-quarter earnings Tuesday. But San Francisco-based Wells Fargo, which has been hurt by California's weak economy, reported a drop. Bank earnings generally have improved the past year as interest rates have fallen. Banks have cut the rates they pay depositors more quickly than they've cut the rates they charge borrowers. CITICORP EARNINGS ARE UP: Citicorp, the USA's largest bank, Tuesday reported slightly better-than-expected earnings for the period ended Sept. 30, thanks to profits from foreign-currency trading and the lower cost of funds. Citicorp earned $116 million, or 17 cents a share, vs. a loss of $885 million, or $2.72 a share, a year ago. Citicorp benefited from $364 million in foreign-exchange revenue. GOLD, SILVER UP: On the New York Commodity Exchange, gold bullion for current delivery settled at $343.80 a troy ounce Tuesday, up $1.10 from Monday. On New York's Comex, silver bullion for current delivery settled at $3.778 a troy ounce, up from $3.718 on Monday. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3186.02 Wednesday after closing down 2.43 Tuesday. The New York Stock Exchange composite opens at 228.58, up 0.34. The American Stock Exchange market value opens at 371.40, up 2.86. The NASDAQ OTC composite opens at 592.70, up 2.03. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Wednesday. It opens at 0.6160 British pounds, up from 0.6119; 5.1445 French francs, up from 5.0480; 1.5190 German marks, up from 1.4885; and 122.35 Japanese yen, up from 119.98. (As of 3 p.m. Tuesday. Source: First American Bank of New York.) SPECIAL PACKAGE ON FUNDS: FUNDS' RETURNS MAY DROP: Income Fund of America says bonds will deliver a 16.3% average annual return the 10 years ended 1991. The last 40 years, stocks averaged just 11.8% a year and bonds only 6%. "That will be a hard act to follow," the report says. "It's unlikely IFA (or any other investment, for that matter) can achieve results like this on an ongoing basis." Other sponsors of big stock funds say the same. FIDELITY CEO WARNS INVESTORS: "It would be unwise to expect any fund to sustain unusually high returns for extended periods," Edward Johnson III, CEO of Fidelity Investments, warned investors earlier this year. Fidelity manages three of the 10 largest stock funds, including the $20.6 billion Magellan fund, the USA's largest stock fund. Vanguard has also been warning investors to scale down expectations from funds. EXPECT NO ABSOLUTE RETURNS: "Investors have to realize they will get high relative returns, not high absolute returns," says David Tripple, manager of Pioneer II. Expectations should be based on what investors could get elsewhere. When riskless money market funds yield 8% or more then investors may get double-digit returns from riskier funds. Today's lower yields will translate to lower stock and bond fund returns. (End of package.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing editor: Martin Baucom. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM